AIR INDUSTRIES GROUP 360 Motor Parkway, Suite 100 Hauppauge, New York 11788

Transcription

1 AIR INDUSTRIES GROUP 360 Motor Parkway, Suite 100 Hauppauge, New York May 15, 2015 Dear Stockholders: On behalf of the Board of Directors, you are cordially invited to attend the 2015 Annual Meeting of Stockholders of Air Industries Group. The Annual Meeting will be held on Thursday, June 25, at 10:00 a.m. Eastern Time at the offices of Air Industries Group, 360 Motor Parkway, Suite 100, Hauppauge, New York The formal Notice of Annual Meeting is set forth in the enclosed material. The matters expected to be acted upon at the Annual Meeting are described in the attached Proxy Statement. During the Annual Meeting, stockholders will have the opportunity to ask questions and comment on our business operations. It is important that your views be represented. If you request a proxy card, please mark, sign and date the proxy card when received and return it promptly in the self-addressed, stamped envelope we will provide. No postage is required if this envelope is mailed in the United States. You also have the option of voting your proxy via the Internet at or by calling toll free via a touch-tone phone at Proxies submitted by telephone or over the Internet must be received by 11:59 p.m. Eastern Time on June 24, Although we encourage you to complete and return a proxy prior to the Annual Meeting to ensure that your vote is counted, you can attend the Annual Meeting and cast your vote in person. If you vote by proxy and also attend the Annual Meeting, there is no need to vote again at the Annual Meeting unless you wish to change your vote. We appreciate your investment in Air Industries Group and urge you to cast your vote as soon as possible. Sincerely, Daniel R. Godin President and Chief Executive Officer

2 TABLE OF CONTENTS Page General Information; Frequently Asked Questions About the Annual Meeting and Voting 1 Proposal One Election of Directors 5 Information Concerning the Board of Directors 5 Information Concerning Executive Officers 10 Security Ownership of Certain Beneficial Owners and Management 14 Audit Committee Report 15 Proposal Two Independent Registered Public Accounting Firm 16 Proposal Three Air Industries Group 2015 Equity Incentive Plan 17 Stockholder Proposals 23 Other Matters 23 Annual Report 24 Delivery of Documents to Stockholders Sharing an Address 24 Appendix A Air Industries Group 2015 Equity Incentive Plan A-1

3 AIR INDUSTRIES GROUP 360 Motor Parkway, Suite 100 Hauppauge, NY NOTICE OF ANNUAL MEETING OF STOCKHOLDERS The 2015 Annual Meeting of Stockholders of Air Industries Group will be held at the offices of Air Industries Group, 360 Motor Parkway, Suite 100, Hauppauge, New York on Thursday June 25, 2015 beginning at 10:00 a.m. Eastern Time for the following purposes: 1. to elect seven directors; 2. to ratify the appointment of Rotenberg Meril Solomon Bertiger & Guttilla, P.C. as our independent registered public accounting firm for the fiscal year ending December 31, 2015; 3. to approve the Air Industries Group 2015 Equity Incentive Plan; and 4. to transact such other business as may properly come before the Annual Meeting and at any adjournment or postponement thereof. The Board of Directors has fixed the close of business on April 30, 2015 as the record date for determining stockholders entitled to notice of and to vote at the Annual Meeting. By order of the Board of Directors, May 15, 2015 Please mark, sign and date the enclosed proxy card and return it promptly in the enclosed self-addressed, stamped envelope. To vote via the Internet or telephone: Internet: Phone: Daniel R. Godin President and Chief Executive Officer

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5 AIR INDUSTRIES GROUP 360 Motor Parkway, Suite 100 Hauppauge, NY PROXY STATEMENT General Information This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of Air Industries Group, a Nevada corporation (the Company, we, our or us ), of proxies to be voted at our 2015 Annual Meeting of Stockholders (the Annual Meeting or the Meeting ) and at any adjournment or postponement of the Meeting. The Annual Meeting will take place on Thursday, June 25, 2015, beginning at 10:00 a.m., Eastern Time, at our offices, 360 Motor Parkway, Suite 100, Hauppauge, New York This Proxy Statement, the Notice of Annual Meeting, our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and accompanying proxy are being mailed to holders of our common stock, par value $0.001 per share ( Common Stock ), on or about May 15, Web links and addresses contained in this Proxy Statement are provided for convenience only, and the content on the referenced websites does not constitute a part of this Proxy Statement. Frequently Asked Questions About the Annual Meeting and Voting 1. Who is entitled to vote at the Annual Meeting? Holders of Common Stock at the close of business on April 30, 2015 are entitled to receive the Notice of Annual Meeting and to vote their shares at the Meeting. Each share of Common Stock is entitled to one vote on each matter properly brought before the Annual Meeting. 2. How many shares of Common Stock are outstanding? As of April 30, 2015, there were 7,559,501 shares of Common Stock outstanding and entitled to be voted at the Annual Meeting. 3. What is the difference between holding shares as a stockholder of record and as a beneficial owner? If your shares are registered in your name with our transfer agent, Broadridge Corporate Issuer Solutions, Inc., you are the stockholder of record of those shares. This Notice of Annual Meeting and Proxy Statement and any accompanying materials have been provided directly to you by Air Industries Group. If your shares are held through a broker, bank or other holder of record, you hold your shares in street name and you are considered the beneficial owner of those shares. This Notice of Annual Meeting and Proxy Statement and any accompanying documents have been provided to you by your broker, bank or other holder of record. As the beneficial owner, you have the right to direct your broker, bank or other holder of record how to vote your shares by using the voting instruction card or by following their instructions for voting by telephone or on the Internet. Absent instructions from you, under applicable regulatory requirements, your broker may vote your shares on the ratification of the appointment of our independent registered public accounting firm for fiscal 2015, but may not vote your shares on the election of directors, the approval of our 2015 Equity Incentive Plan or any of the other proposals to be voted on at the Annual Meeting. 1

6 4. How do I vote? By mail You may vote using any of the following methods: Complete, sign and date the accompanying proxy or voting instruction card and return it in the prepaid envelope. If you are a stockholder of record and return your signed proxy card but do not indicate your voting preferences, the persons named in the proxy card will vote the shares represented by your proxy card as recommended by the Board of Directors. By telephone or on the Internet Air Industries Group has established telephone and Internet voting procedures for stockholders of record. These procedures are designed to authenticate your identity, to allow you to give your voting instructions and to confirm that those instructions have been properly recorded. Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day until 11:59 p.m., Eastern Time, on June 24, The availability of telephone and Internet voting for beneficial owners will depend on the voting processes of your broker, bank or other holder of record. We therefore recommend that you follow the voting instructions in the materials you receive. If you vote by telephone or on the Internet, you do not have to return your proxy or voting instruction card. Telephone. You can vote by calling the toll-free telephone number on your proxy card. Please have your proxy card handy when you call. Easy-to-follow voice prompts will allow you to vote your shares and confirm that your instructions have been properly recorded. Internet. The website for Internet voting is Please have your proxy card handy when you go to the website. As with telephone voting, you can confirm that your instructions have been properly recorded. If you vote on the Internet, you also can request electronic delivery of future proxy materials. In person at the Annual Meeting Stockholders who attend the Annual Meeting may vote in person at the Meeting. You may also be represented by another person at the Meeting by executing a proper proxy designating that person. If you are a beneficial owner of shares, you must obtain a legal proxy from your broker, bank or other holder of record and present it to the inspector of election with your ballot to be able to vote at the Annual Meeting. Your vote is important. Please complete your proxy card promptly to ensure that your vote is received timely. 5. What can I do if I change my mind after I vote? If you are a stockholder of record, you can revoke your proxy before it is exercised by: giving written notice to the Corporate Secretary of the Company; delivering a valid, later-dated proxy, or a later-dated vote by telephone or on the Internet, in a timely manner; or voting by ballot at the Annual Meeting. 2

7 If you are a beneficial owner of shares, you may submit new voting instructions by contacting your broker, bank or other holder of record. All shares for which proxies have been properly submitted and not revoked will be voted at the Annual Meeting. 6. What is a broker non-vote? If you are a beneficial owner whose shares are held of record by a broker, you must instruct the broker how to vote your shares. If you do not provide voting instructions, your shares will not be voted on any proposal on which the broker does not have discretionary authority to vote. This is called a broker non-vote. In these cases, the broker can register your shares as being present at the Annual Meeting for purposes of determining the presence of a quorum but will not be able to vote on those matters for which specific authorization is required under the rules of the New York Stock Exchange ( NYSE ). If you are a beneficial owner whose shares are held of record by a broker, your broker has discretionary voting authority under NYSE rules to vote your shares on the ratification of Rotenberg Meril Solomon Bertiger & Guttilla, P.C. as our independent registered public accounting firm, even if the broker does not receive voting instructions from you. However, your broker does not have discretionary authority to vote on the election of directors or the approval of our 2015 Equity Incentive Plan, in which case a broker non-vote will occur and your shares will not be voted on these matters. 7. What is a quorum for the Annual Meeting? The presence of the holders of Common Stock representing a majority of the voting power of all shares of Common Stock issued and outstanding and entitled to vote at the Annual Meeting, in person or represented by proxy, is necessary to constitute a quorum. Abstentions and broker non-votes are counted as present and entitled to vote for purposes of determining a quorum. 8. What are the voting requirements to elect the directors and to approve each of the proposals discussed in this Proxy Statement? Proposal Election of Directors iratification of Rotenberg Meril Solomon Bertiger & Guttilla, P.C. as our independent registered public accounting firm Approval of Air Industries Group 2015 Equity Incentive Plan Vote Required Plurality of Votes Cast Majority of Votes Cast Majority of Votes Cast Broker Discretionary Voting Allowed No Yes No If you abstain from voting or there is a broker non-vote on any matter, your abstention or the broker non-vote will not affect the outcome of such vote, because abstentions and broker non-votes are not considered to be votes cast. Election of Directors Directors are elected by a plurality of the votes cast at the Annual Meeting. This means that the seven persons receiving the highest number of affirmative "for" votes at the Annual Meeting will be elected. Abstentions and broker non-votes are not counted as votes for or against a director nominee. 3

8 Ratification of Rotenberg Meril Solomon Bertiger & Guttilla, P.C as our independent registered public accounting firm The votes cast for must exceed the votes cast against to approve the ratification of Rotenberg Meril Solomon Bertiger & Guttilla, P.C as our independent registered public accounting firm. Abstentions are not counted as votes for or against this proposal. Approval of Air Industries Group 2015 Equity Incentive Plan The votes cast for must exceed the votes cast against to approve the Air Industries Group Equity Incentive Plan. Abstentions are not counted as votes for or against this proposal. 9. How will my shares be voted at the Annual Meeting? At the Meeting, the Board of Directors (the persons named in the proxy card or, if applicable, their substitutes) will vote your shares as you instruct. If you sign your proxy card and return it without indicating how you would like to vote your shares, your shares will be voted as the Board of Directors recommends, which is: FOR the election of each of the director nominees named in this Proxy Statement; FOR the ratification of the appointment of Rotenberg Meril Solomon Bertiger & Guttilla, P.C as our independent registered public accounting firm for the fiscal year ending December 31, FOR the approval of the Air Industries Group 2015 Equity Incentive Plan. 10. Could other matters be decided at the Annual Meeting? As of the date of this Proxy Statement, we did not know of any matters to be presented at the Annual Meeting, other than those referred to in this Proxy Statement. If you return your signed and completed proxy card or vote by telephone or on the Internet and other matters are properly presented at the Annual Meeting for consideration, the individuals named as proxies on the enclosed proxy card will have the discretion to vote on your behalf. 11. Who will pay for the cost of the Annual Meeting and this proxy solicitation? The Company will pay the costs associated with the Annual Meeting and solicitation of proxies, including the costs of mailing the proxy materials. In addition to solicitation by mail, our directors, officers and regular employees (who will not be specifically compensated for such services) may solicit proxies by telephone or otherwise. Arrangements will be made with brokerage houses and other custodians, nominees and fiduciaries to forward proxies and proxy materials to their principals, and we will reimburse them for their expenses. We have retained Broadridge Corporate Issuer Solutions, Inc. to assist in the mailing, collection and administration of proxies. We have not retained a soliciting agent to assist in the solicitation of proxies. 4

9 MATTERS TO COME BEFORE THE ANNUAL MEETING PROPOSAL ONE: Election of Directors Nominees At the Annual Meeting, seven directors, who have been nominated by the Nominating Committee of the Board of Directors, are to be elected, each to hold office (subject to our By-Laws) until the next annual meeting and until his successor has been elected and qualified. All of the nominees for director currently serve as directors. Each nominee has consented to being named as a nominee in this proxy statement and to serve if elected. If any nominee listed in the table below should become unavailable for any reason, which the Board of Directors does not anticipate, the proxy will be voted for any substitute nominee or nominees who may be selected by the Board of Directors prior to or at the Annual Meeting, or, if no substitute is selected by the Board of Directors prior to or at the Annual Meeting, for a motion to reduce the membership of the Board of Directors to the number of nominees available. The seven nominees receiving the highest number of affirmative "for" votes at the Annual Meeting will be elected. The information concerning the nominees and their security holdings has been furnished by them to us. Directors are nominated by our Board of Directors, based on the recommendations of the Nominating Committee. As discussed elsewhere in this proxy statement, in evaluating director nominees, the Nominating Committee considers characteristics that include, among others, integrity, business experience, financial acumen, leadership abilities, familiarity with our businesses and businesses similar or analogous to ours, and the extent to which a candidate s knowledge, skills, background and experience are already represented by other members of our Board of Directors. Listed below are our director nominees with their biographies. Nominee Age Director Since Michael N. Taglich Peter D. Rettaliata Seymour G. Siegel Robert F. Taglich David J. Buonanno Robert C. Schroeder Michael Brand Michael N. Taglich has been Chairman of our Board of Directors since September 22, He is Chairman and President of Taglich Brothers, Inc. ("Taglich Brothers"), a New York City based securities firm which he cofounded in 1992 and which is focused on public and private micro-cap companies. From 1987 to 1992, Mr. Taglich served as a vice president at Weatherly Securities. He brings a broad depth and breadth of capital and business background to the Board, with extensive experience in exit strategies. Mr. Taglich is currently Chairman of the Board of SCOLR Pharma Inc, a publicly traded pharmaceutical company, and BioVentrix, Inc., a privately held medical device company whose products are directed at heart failure. He also serves as a director of DecisionPoint Systems, Inc., a publicly traded company. Mr. Taglich holds a B.S. degree in General and International Business from New York University and holds Series 27 and Series 7 securities licenses. Mr. Taglich s extensive experience in the capital markets and his knowledge of the aerospace industry qualify him to serve as a director. Peter D. Rettaliata served as our President and Chief Executive Officer from November 30, 2005 to December 31, He also served as the President of our wholly-owned subsidiary, AIM, from 1994 to Prior to his involvement at AIM, Mr. Rettaliata was employed by Grumman Aerospace Corporation for twenty - two years. Professionally, Mr. Rettaliata has served as the Chairman of "ADDAPT", an organization of regional aerospace companies, as a member of the Board of Governors of the Aerospace Industries Association, and as a member of the Executive Committee of the AIA Supplier Council. He is a graduate of Niagara University where he received a B.A. in History and the Harvard Business School where he completed the PMD Program. Mr. 5

10 Rettaliata s extensive experience in the aerospace industry and his knowledge of our operations qualify him to serve as a director. Seymour G. Siegel, a Certified Public Accountant, was a principal emeritus at Rothstein Kass (now KPMG), an international firm of accountants and consultants until July Mr. Siegel was a founder of Siegel Rich & Co., CPAs, which eventually merged with what is now known as WeiserMazars LLP, where he was a senior partner until January 1995, when he sold his interest in the firm and co-founded a business advisory firm which later became a part of Rothstein Kass. In addition to serving as a director and chairman of the audit committees of our Board, Mr. Siegel also serves as a director and chairman of the audit committee of Root 9B Technologies Inc. Mr. Siegel received his Bachelor of Business Administration from the Bernard M. Baruch School of the City College of New York. Mr. Siegel s extensive knowledge and experience in accounting matters and familiarity with the issues of manufacturing businesses qualify him to serve as a director of our company. Robert F. Taglich is a managing director of Taglich Brothers, a New York City based securities firm which he co-founded in Prior to founding Taglich Brothers, Mr. Taglich was a vice president at Weatherly Securities. Mr. Taglich has served in various positions in the brokerage securities industry for the past 25 years. He currently sits on the board of privately held BioVentrix, Inc., a medical device company whose products are directed at heart failure. Mr. Taglich holds a Bachelor s degree from New York University. Mr. Taglich s extensive experience in the capital markets and his knowledge of the aerospace industry qualify him to serve as a director. David J. Buonanno is the Founder and President of Buonanno Enterprises Consulting, providing strategic management, supply chain/operations and recruitment services to aerospace and defense industry clients. He is a member of the Executive Advisory Board of Bridgeways, Inc. and the Advisory Board of Alken Industries, Inc. Mr. Buonanno has extensive experience in manufacturing, supply management and operations. He was employed by Sikorsky Aircraft, Inc., a subsidiary of United Technologies Corporation, as Vice President, Supply Management and International Offset (from January 1997 to July 2006) and as Director, Systems Subcontracts (from November 1992 to January 1997). From May 1987 to November 1992, he was employed by General Electric Company serving as Operations Manager and Manager, Program Materials Management of GE s Astro-Space Division. From June 1977 to May 1987, he was employed by RCA and affiliated companies. Mr. Buonanno attended Lehigh University College of Electrical Engineering and holds a B.S. in Business Administration from Rutgers University. He completed the Program for Management Development at Harvard Business School in Mr. Buonanno s extensive experience in the aerospace and defense industries and familiarity with the operations of companies in the industry qualify him to serve as a director. Robert C. Schroeder is Vice President - Investment Banking of Taglich Brothers and specializes in advisory services and capital raising for small public and private companies. Prior to that, Mr. Schroeder served as Senior Equity Analyst publishing sell-side research. Prior to joining Taglich Brothers, he served in various positions in the brokerage and public accounting industry. Mr. Schroeder serves as a director of DecisionPoint Systems, Inc., a publicly-traded company. Mr. Schroeder received a B.S. degree in accounting and economics from New York University. He is a Chartered Financial Analyst and a member of the Association for Investment Management and Research and a member of the New York Society of Security Analysts. Mr. Schroeder s extensive experience in the capital markets qualify him to serve as a director. Michael Brand was the President of Goodrich Landing Gear, a unit of Goodrich Corporation, from July 2005 to June Prior to joining Goodrich for over 25 years he held senior management positions in the Aerospace industry. He began his career at General Electric Corporation and rose to senior management in its jet engine manufacturing operations. Mr. Brand is a graduate of Clarkson University, with advanced degrees and certificates from Xavier University and the Wharton School. Mr. Brand s extensive experience in the aerospace and defense industries and familiarity with the operations of companies in the industry qualify him to serve as a director. Michael N. Taglich and Robert F. Taglich are brothers. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH NOMINEE UNDER PROPOSAL ONE 6

11 Information Concerning the Board of Directors Board Leadership Structure and Risk Oversight The Board does not have a policy requiring separation of the roles of Chief Executive Officer and Chairman of the Board. Nevertheless, Michael N. Taglich is Chairman of the Board and Daniel R. Godin is Chief Executive Officer of the Company. The Board has determined that a non-employee director serving as Chairman is in the best interests of our stockholders at this time. This structure ensures a greater role of non-employee directors in the active oversight of our business, including risk management oversight, and in setting agendas and establishing Board priorities and procedures. This structure also allows the Chief Executive Officer to focus to a greater extent on the management of our day-to-day operations. The Board of Directors as a whole is responsible for consideration and oversight of risks facing the Company, and is responsible for ensuring that material risks are identified and managed appropriately. Certain risks are overseen by committees of the Board of Directors and these committees make reports to the full Board of Directors, including reports on noteworthy risk-management issues. Members of the Company s senior management team regularly report to the full Board about their areas of responsibility and a component of these reports is risk within the area of responsibility and the steps management has taken to monitor and control such exposures. Additional review or reporting on risks is conducted as needed or as requested by the Board or one of its committees. Board Independence Our Board of Directors has determined that Robert Schroeder, Seymour G. Siegel, David Buonanno and Michael Brand are "independent directors" within the meaning of NYSE MKT Rule 803A(2). Board Meetings; Committees and Membership The Board of Directors held five meetings during the fiscal year ended December 31, 2014 ( fiscal 2014 ). During fiscal 2014, each of the directors then in office attended more than 75% of the aggregate of (i) the total number of meetings of the Board of Directors and (ii) the total number of meetings of all committees of the Board on which such director served. We maintain the following committees of the Board of Directors: the Audit Committee, the Compensation Committee and the Nominating Committee. Each committee is comprised entirely of directors who are independent within the meaning of NYSE MKT Rule 803A(2). Each committee acts pursuant to a separate written charter, and each such charter has been adopted and approved by the Board of Directors. Copies of the committee charters are available on our website at airindustriesgroup.com under the heading Investor Relations. Audit Committee. Messrs. Siegel, Schroeder and Buonanno are members of the Audit Committee. Mr. Siegel serves as Chairman of the Audit Committee and also qualifies as an "audit committee financial expert," as that term is defined in Item 407(d)(5)(ii) of Regulation S-K. The Board has determined that each member of our Audit Committee meets the financial literacy requirements under the Sarbanes-Oxley Act and SEC rules and the independence requirements under NYSE MKT Rule 803A(2). The Audit Committee held four meetings during fiscal Our Audit Committee is responsible for preparing reports, statements and charters required by the federal securities laws, as well as: overseeing and monitoring the integrity of our consolidated financial statements, our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters, and our internal accounting and financial controls; 7

12 preparing the report that SEC rules require be included in our annual proxy statement; overseeing and monitoring our independent registered public accounting firm's qualifications, independence and performance; providing the Board with the results of its monitoring and its recommendations; and providing to the Board additional information and materials as it deems necessary to make the Board aware of significant financial matters that require the attention of the Board. Compensation Committee. Our Compensation Committee is composed of Messrs. Siegel, Buonanno and Brand. The Compensation Committee is responsible for: establishing the Company s general compensation policy, in consultation with the Company s senior management, and overseeing the development and implementation of compensation programs. reviewing and approving corporate goals and objectives relevant to the compensation of the CEO, and evaluating the performance of the CEO at least annually in light of those goals and objectives and communicating the results of such evaluation to the CEO and the Board, and determinig the CEO s compensation level based on this evaluation, subject to ratification by the independent directors on the Board. In determining the incentive component of CEO compensation, the Committee will consider, among other factors, the Company s performance and relative stockholder return, the value of similar incentive awards to CEOs at comparable companies, the awards given to the CEO in past years, and such other factors as the Committee may determine to be appropriate. reviewing and approving the compensation of all other executive officers of the Company, such other managers as may be directed by the Board, and the directors of the Company. overseeing the Board s benefit and equity compensation plans, overseeing the activities of the individuals and committees responsible for administering these plans, and discharging any responsibilities imposed on the Committee by any of these plans. approving issuances under, or any material amendments to, any stock option or other similar plan pursuant to which a person not previously an employee or director of the Company, as an inducement material to the individual s entering into employment with the Company, will acquire stock or options. in consultation with management, overseeing regulatory compliance with respect to compensation matters, including overseeing the Company s policies on structuring compensation programs to preserve related tax objectives. reviewing and approving any severance or similar termination payments proposed to be made to any current or former officer of the Company. preparing an annual report on executive compensation for inclusion in our proxy statement for the election of directors, if required under the applicable SEC rules. The Compensation Committee held two meetings during fiscal Nominating Committee. Our Nominating Committee is composed of Messrs. Schroeder, Siegel and Brand. The purpose of the Nominating Committee is to seek and nominate qualified candidates for election or appointment to our Board of Directors. The Nominating Committee will seek candidates for election and appointment that possess the integrity, leadership skills and competency required to direct and oversee the Company s management in the best interests of its stockholders, customers, employees, communities it serves and other affected parties. The Nominating Committee held one meeting during fiscal A candidate must be willing to regularly attend Committee and Board of Directors meetings, to develop a strong understanding of the Company, its businesses and its requirements, to contribute his or her time and knowledge to the Company and to be prepared to exercise his or her duties with skill and care. In addition, each candidate should have an understanding of all corporate governance concepts and the legal duties of a director of a public company. Stockholders may contact the Nominating Committee Chairman, the Chairman of the Board or the Corporate Secretary in writing when proposing a nominee. This correspondence should include a detailed description of the proposed nominee s qualifications and a method to contact that nominee if the Nominating Committee so chooses. 8

13 Stockholder Communications Any stockholder who desires to contact any of our Directors can write to Air Industries Group, 360 Motor Parkway, Suite 100, Hauppauge NY Attention: Stockholder Relations. Your letter should indicate that you are an Air Industries Group stockholder. Depending on the subject matter, our stockholder relations personnel will: forward the communication to the Director(s) to whom it is addressed; forward the communication to the appropriate management personnel; attempt to handle the inquiry directly, for example where it is a request for information about the Company, or it is a stock-related matter; or not forward the communication if it is primarily commercial in nature or if it relates to an improper or irrelevant topic. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers and beneficial owners of more than 10% of our common stock to file with the SEC reports of their holdings of, and transactions in, our common stock. Based solely upon our review of copies of such reports and written representations from reporting persons that were provided to us, we believe that our officers, directors and 10% stockholders complied with these reporting requirements with respect to 2014, except that the statement of changes in beneficial ownership on Form 4 filed by Michael N. Taglich, Robert F. Taglich and Robert Schroeder reporting the grant of warrants granted to each of them and Seymour G. Siegel, David Buonanno and Michael Brand with respect to stock options granted to each of them on March 2014 were filed late. Director Compensation Non-employee directors are entitled to receive compensation for serving as directors and may receive option grants from our company. Each director also is entitled to be repaid or prepaid all traveling, hotel and incidental expenses reasonably incurred or expected to be incurred in attending meetings of our Board of Directors or committees of our Board of Directors or shareholder meetings or otherwise in connection with the discharge of his duties as a director. The compensation committee will assist the directors in reviewing and approving the compensation structure for our directors. The following table sets forth certain information regarding the compensation paid to our directors during the fiscal year ended December 31, DIRECTOR COMPENSATION Non- Non-Equity Qualified Fees Incentive Plan Deferred All Other Earned Stock or Paid in Awards Option Compensation Compensation Compensation Name Cash ($) ($) Awards ($) ($) Earnings ($) ($) Total ($) Michael N. Taglich 57,500-4, ,010 Robert F. Taglich 57,500-4, ,010 Robert Schroeder 24,000-4, ,510 David Buonanno 24,000-4, ,510 Seymour G. Siegel 36,000-4, ,510 Michael Brand 24,000-4, ,000 38,510 9

14 Policy Regarding Attendance of Directors at Annual Meetings of Stockholders We have not established a formal policy regarding director attendance at our annual meetings of stockholders, although we encourage our directors to attend the annual meeting. Code of Ethics We have adopted a written code of ethics that applies to our principal executive officers, senior financial officers and persons performing similar functions. Upon written request to our corporate secretary, we will provide you with a copy of our code of ethics, without cost. Information Concerning Executive Officers Our executive officers are set forth in the table below along with their ages and positions. Each executive officer holds the offices set forth opposite his name until his successor is chosen and qualified at a meeting of the Board of Directors. Name Age Position Daniel R. Godin 53 Chief Executive Officer and President James Sartori 45 Vice President -- Chief Accounting Officer Daniel R. Godin has been our President and Chief Executive Officer since January 1, Prior to joining the Company on December 1, 2014, Mr. Godin was employed by the Merex Group since May 5, 2014 as President of Maintenance, Repair and Overhaul units of MRO Solutions, where he had P&L responsibility and provided strategy and leadership to all MRO business units within the Merex Group. From November 2008 to May 2, 2014, he was employed at Circor Aerospace, Inc. as North America Vice President and General Manager of Circor Aerospace & Defense, providing P&L and business leadership for a group of businesses focused on OEM and aftermarket design, manufacturing and MRO of proprietary fluid controls and landing gear technology. Prior to working at Circor Aerospace & Defense, Mr. Godin was employed as a Vice President at Sermatech International, Inc. where was responsible for operations and improving overall profitability. Prior to working at Sermatech International, Inc., Mr. Godin was employed at United Technologies Pratt & Whitney aircraft engines division and had roles in Process Engineering, Operations Management, Supply Chain and Business Center Leadership for complex aircraft turbine engine equipment development and manufacturing. Mr. Godin holds a Bachelor of Science in Manufacturing Engineering from the University of Southern Maine and completed the Executive Business Program at the Darden School at the University of Virginia. He served with the United States Air Force and holds five US Patents for specialized aircraft and industrial engine coatings and engineered components. James Sartori has been our Vice President -- Chief Accounting Officer since January 15, Mr. Sartori joined the Company in September From May 2008 until August 2014, Mr. Sartori was employed as Controller of Triumph Structures Long Island, a subsidiary of Triumph Group, Inc., a manufacturer of structural and dynamic parts and assemblies for commercial and military aerospace programs. Mr. Sartori received a Bachelor of Science in Business Administration in 1992 from Boston University with a concentration in Accounting. Summary Compensation Table The following summary compensation table shows, for the periods indicated, information regarding the compensation awarded to, earned by or paid to our principal executive officer, our chief accounting officer (our only other executive officer whose compensation exceeds $100,000) and our two most highly compensated employees not serving as executive officers of our company, for all services rendered in all capacities to our company and its subsidiaries. The individuals listed in the following table are referred to herein collectively as our named executive officers. 10

15 Executive Compensation Table Non-equity Nonqualified Incentive deferred Stock Option Plan compensation All other Name and principal Position Year Salary Bonus awards awards Information earnings compensation Total ($) ($) ($) ($) ($) ($) ($) ($) Peter D. Rettaliata (1) , ,433 President and CEO ,203 12,000-13, ,171 Scott A. Glassman (2) , ,000 (3) 134,057 Chief Accounting Officer ,937 6,400-3, ,000 (3) 157,060 Dario A. Peragallo , ,865 (3) 241,888 General Manager, AIM ,676 11,000-16, ,988 (3) 269,425 Robert Hunt , ,001 General Manager, NTW ,001 6, ,251 (1) Mr. Rettaliata resigned as President and CEO effective as of December 31, (2) Mr. Glassman resigned as Chief Accounting Officer on January 15, (3) Represents car allowance. None of our executive officers or key employees named in the above table has an employment agreement providing for a fixed term of employment. All are employees at will terminable at any time without any severance, other than that payable to employees generally. Terms of Daniel R. Godin s Employment Daniel R. Godin, our President and Chief Executive Officer, is entitled to a base salary of $250,000 per annum, plus a bonus for 2015 based upon performance criteria to be determined. We also paid Mr. Godin a signing bonus of $50,000. In addition, Mr. Godin receives a car allowance of $800 per month and is eligible to participate in such health and welfare plans as are made available to our executives generally. On December 1, 2014, we granted Mr. Godin options to purchase 120,000 shares at an exercise price of $10.12 per share. The options vest in quarterly installments of 10,000 shares on the first day of March, June, September and December of each year commencing March 1, 2015 until fully vested as to 120,000 shares on December 1, The options expire on November 30, Terms of James Sartori s Employment James Sartori, our Vice President -- Chief Accounting Officer, is entitled to a base salary of $175,000 and is eligible for such cash bonuses and equity incentive awards as the Board from time to time determines to be appropriate. In addition, Mr. Sartori receives a car allowance of $750 per month and is eligible to participate in such health and welfare plans as are made available to our executives generally. On March 19, 2015, we granted Mr. Sartori an option to purchase 11,000 shares of common stock at an exercise price of $10.34 per share. The options vest in annual installments of 3,666 shares on the first two anniversaries of the date of grant, and as to 3,668 shares on the third anniversary of the date of grant, when they become fully vested as to 11,000 shares. The options expire on March 19, Executive Compensation Policies as They Relate to Risk Management The Compensation Committee and management have considered whether our compensation policies might encourage inappropriate risk taking by the Company s executive officers and other employees. The Compensation Committee has determined that the current compensation structure aligns the interests of the executive officers with those of the Company without providing rewards for excessive risk taking by awarding a mix of fixed and performance based or discretionary bonuses with the performance based compensation focused on profits as opposed to revenue growth. 11

16 During the years ended December 31, 2014 and 2013, less than 1% of the total compensation paid to employees was paid in performance-based compensation, including commissions and bonuses. Equity Awards 2014 We did not grant any equity awards in the form of shares or options to purchase shares to any of the named executive officers during 2014 and consequently have omitted the table which would have described such awards. Outstanding Equity Awards at 2014 Fiscal Year-End The following table shows certain information regarding outstanding equity awards held by our named executive officers as of December 31, Option Awards Stock Awards Equity Incentive Number of Number of Plan Awards: Equity Incentive Plan Securities Securities Number of Awards: Market or Underlying Underlying Unearned Shares, Payout Value of Unexercised Unexercised Option Option Units or Other Unearned Shares, Options (#) Options (#) Exercise Expiration Rights That Have Units or Other Rights Name Exercisable Unexercisable Price ($) Date Not Vested (#) That Have Not Vested Peter D. Rettaliata /26/ Peter D. Rettaliata /26/ Peter D. Rettaliata /26/ Peter D. Rettaliata /26/ Peter D. Rettaliata 1, /26/ Peter D. Rettaliata 51, /29/ Peter D. Rettaliata 6,250 12, /31/ Scott Glassman /31/ Scott Glassman - 3, /31/ Dario A. Peragallo /26/ Dario A. Peragallo /26/ Dario A. Peragallo /26/ Dario A. Peragallo /26/ Dario A. Peragallo 1, /26/ Dario A. Peragallo 51, /29/ Dario A. Peragallo 7,500 15, /31/ Robert Hunt Equity Incentive Plans Our Board of Directors adopted the 2013 Equity Incentive Plan ( the 2013 Plan ) in June 2013, and the plan was approved by the Company s stockholders on July The 2013 Plan is virtually identical to and replaced the 2010 Equity Incentive Plan which was adopted in July of The Company reserved 600,000 shares of its Common Stock for various issuances, and as of March 31, 2015, 40,461 shares remained available for issuance under the 2013 Plan. The 2013 Plan permits the Company to grant non-qualified and incentive stock options to employees, directors and consultants. The Plan is administered by the Compensation Committee of the Board and has a term of ten years from the date it was adopted by the Board. 12

17 Our Board of Directors adopted the 2015 Equity Incentive Plan ( the 2015 Plan ) in March 2015, and the plan is being submitted to stockholders for approval at the Annual Meeting. See Proposal Three. The 2015 Plan is virtually identical to the 2013 Equity Incentive Plan. The Company reserved 350,000 shares of its Common Stock for various issuances. The 2015 Plan permits the Company to grant non-qualified and incentive stock options to employees, directors and consultants. The Plan is administered by the Compensation Committee of the Board and has a term of ten years from the date it was adopted by the Board. We adopted the Plan to provide a means by which employees, directors, and consultants of our Company and those of our subsidiaries and other designated affiliates, which we refer to together as our affiliates, may be given an opportunity to purchase our Common Stock, to assist in retaining the services of such persons, to secure and retain the services of persons capable of filling such positions, and to provide incentives for such persons to exert maximum efforts for our success and the success of our affiliates. Transactions with Related Persons Our Policy Concerning Transactions with Related Persons Under Item 404 of SEC Regulation S-K, a related person transaction is any actual or proposed transaction, arrangement or relationship or series of similar transactions, arrangements or relationships, including those involving indebtedness not in the ordinary course of business, to which we or our subsidiaries were or are a party, or in which we or our subsidiaries were or are a participant, in which the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at year end for the last two completed fiscal years and in which any of our directors, nominees for director, executive officers, beneficial owners of more than 5% of any class of our voting securities (a significant shareholder ), or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest. We recognize that transactions between us and any of our directors or executives or with a third party in which one of our officers, directors or significant shareholders has an interest can present potential or actual conflicts of interest and create the appearance that our decisions are based on considerations other than the best interests of our Company and shareholders. The Audit Committee of the Board of Directors is charged with responsibility for reviewing, approving and overseeing any transaction between the Company and any related person (as defined in Item 404 of Regulation S- K), including the propriety and ethical implications of any such transactions, as reported or disclosed to the Committee by the independent auditors, employees, officers, members of the Board of Directors or otherwise, and to determine whether the terms of the transaction are not less favorable to us than could be obtained from an unaffiliated party. Transactions with Related Persons The following includes a summary of transactions since January 1, 2013, or any currently proposed transaction, in which we were or are to be a participant and the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at year end for the last two completed fiscal years, and in which any related person had or will have a direct or indirect material interest. In connection with the private placement of our common stock in connection with the acquisition of Nassau Tool Works, Inc., we paid Taglich Brothers, Inc., as placement agent, a commission of 8.0% or $569,208. In addition, we agreed to issue to Taglich Brothers, Inc., 12,000 shares of common stock of the Company as a nonaccountable expense allowance and five-year warrants to purchase 118,585 shares of Common Stock, 10.0% of the number of shares sold in the Offering, at an exercise price of $6.30. On January 1, 2014, we entered into a Capital Market Advisory Agreement with Taglich Brothers pursuant to which Taglich Brothers provides us, on a non-exclusive basis, business advisory services for a monthly fee of $7,000 and a warrant to purchase 10,000 shares of our common stock at an exercise price of $8.72 per share. 13

18 In connection with our public offering of 1,170,000 shares of common stock completed on June 3, 2014, we paid Taglich Brothers, which acted as placement agent for the offering, $842,400, representing 8% of the gross proceeds of the offering as a sales commission, plus an additional $75,000 in reimbursement of counsel fees. In addition, we granted Taglich Brothers placement agent warrants to purchase 46,800 shares of common stock, representing 4% of the shares sold in the offering as additional compensation. The warrants are exercisable for cash or on a cashless basis at a per share exercise price equal to $11.25, commencing May 29, 2015 and expiring May 28, We paid Taglich Brothers a total of $18,000 ($1,500 per month) during 2014 for posting its research reports on our company on its website pursuant to a research distribution agreement and $6,000 to date during The foregoing transactions were reviewed and approved by the Audit Committee or our Board of Directors. We believe that the terms of each transaction were not less favorable to us than those terms that could be obtained from an unaffiliated third party. Security Ownership of Certain Beneficial Owners and Management The following table sets forth information known to us regarding beneficial ownership of our common stock as of April 30, 2015 by (i) each person known by us to own beneficially more than 5% of our outstanding common stock, (ii) each of our directors, (iii) our chief executive officer, and (iii) all of our directors and executive officers as a group. Except as otherwise indicated, we believe, based on information provided by each of the individuals named in the table below, that such individuals have sole investment and voting power with respect to such shares, subject to community property laws, where applicable. As of April 30, 2015 we had outstanding 7,559,501 shares of our common stock. Except as stated in the table, the address of the holder is c/o our company, 360 Motor Parkway, Suite 100, Hauppauge, New York Name Directors and Executive Officers: Number of Shares Percent of Class Michael N. Taglich 313,323(1) 4.12% Peter D. Rettaliata (former President and CEO) 63,785(2) * Robert F. Taglich 362,971(3) 4.78% Seymour G. Siegel 13,789(4) * David Buonanno 13,539(4) * Robert Schroeder 49,597(5) * Michael Brand 13,000(6) * Daniel Godin, President and CEO 20,000(6) * Scott A. Glassman, former Chief Accounting Officer (7) 12 * All Directors and Executive Officers 828,352(8) 10.61% as a group (9 persons, excluding Mr. Glassman) * Less than 1 % (1) Includes 21,652 shares owned by Taglich Brothers, Inc. and other entities controlled by Mr. Taglich, 31,190 shares he may acquire upon exercise of warrants and 13,000 shares he may acquire upon exercise of options, in each case exercisable within 60 days. (2) Includes 60,966 shares he may acquire upon exercise of options exercisable within 60 days. (3) Includes 21,652 shares owned by Taglich Brothers, Inc. and other entities controlled by Mr. Taglich, 31,190 shares he may acquire upon exercise of warrants and 13,000 shares he may acquire upon exercise of options, in each case exercisable within 60 days. (4) Includes 13,000 shares he may acquire upon exercise of options exercisable within 60 days. (5) Includes 27,585 shares he may acquire upon exercise of warrants and 13,000 shares he may acquire upon exercise of options, in each case exercisable within 60 days. (6) Represents shares he may acquire upon exercise of options exercisable within 60 days. 14

19 (7) Mr. Glassman is no longer employed by our company. (8) Includes 89,965 shares that may be acquired upon exercise of warrants and 158,966 shares that may be acquired upon exercise of options, in each case exercisable within 60 days. Audit Committee Report to Stockholders Pursuant to rules adopted by the SEC designed to improve disclosures related to the functioning of corporate audit committees and to enhance the reliability and credibility of financial statements of public companies, the Audit Committee of our Board of Directors submits the following report: The Audit Committee of the Board of Directors is responsible for providing independent, objective oversight of the Company s accounting functions and internal controls. The Audit Committee is composed of three directors, each of whom is independent within the meaning of NYSE MKT 803A(2). The Audit Committee operates under a written charter approved by the Board of Directors. Management is responsible for the Company s internal controls over financial reporting, disclosure controls and procedures and the financial reporting process. The independent registered public accounting firm is responsible for performing an independent audit of the Company s consolidated financial statements in accordance with Public Company Accounting Oversight Board (PCAOB) standards and to issue reports thereon. The Audit Committee s responsibility is to monitor and oversee these processes. The Audit Committee has established a mechanism to receive, retain and process complaints on auditing, accounting and internal control issues, including the confidential, anonymous submission by employees, vendors, customers and others of concerns on questionable accounting and auditing matters. In connection with these responsibilities, the Audit Committee met with management and the independent registered public accounting firm to review and discuss the December 31, 2014 audited consolidated financial statements. The Audit Committee also discussed with the independent registered public accounting firm the matters required by Statement on Auditing Standards Update No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted by the PCAOB in Rule 3200T. In addition, the Audit Committee received the written disclosures from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent accountant s communications with the Audit Committee concerning independence, and the Audit Committee has discussed the independent registered public accounting firm s independence from the Company and its management. Based upon the Audit Committee s discussions with management and the independent registered public accounting firm, and the Audit Committee s review of the representations of management and the independent registered public accounting firm, the Audit Committee recommended that the Board of Directors include the audited consolidated financial statements in the Company s Annual Report on Form 10-K for fiscal 2014 filed with the SEC. The Audit Committee also has appointed, subject to stockholder ratification, Rotenberg Meril Solomon Bertiger & Guttilla, P.C. as the Company s independent registered public accounting firm for the fiscal year ending December 31, Respectfully submitted, THE AUDIT COMMITTEE Seymour G. Siegel, Chairman Robert C. Schroeder David J. Buonanno The Report of the Audit Committee should not be deemed filed or incorporated by reference into any other filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates the Report of the Audit Committee therein by reference. 15

20 PROPOSAL TWO: Independent Registered Public Accounting Firm The Audit Committee has appointed Rotenberg Meril Solomon Bertiger & Guttilla, P.C. to serve as our independent registered public accounting firm and to audit our consolidated financial statements. Rotenberg Meril Solomon Bertiger & Guttilla, P.C. does not expect to have a representative present at the meeting of stockholders. We are asking our stockholders to ratify the selection of Rotenberg Meril Solomon Bertiger & Guttilla, P.C. as our independent registered public accounting firm for the fiscal year ending December 31, Although ratification is not required by our By-laws or otherwise, the Board is submitting the selection of Rotenberg Meril Solomon Bertiger & Guttilla, P.C. to our stockholders for ratification because we value our stockholders views on our independent registered public accounting firm and as a matter of good corporate practice. In the event that our stockholders fail to ratify the selection, it will be considered as a direction to the Board of Directors and the Audit Committee to consider the selection of a different firm. Even if the selection is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in our best interests and the best interests of our stockholders. Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm The Audit Committee pre-approves all audit and permissible non-audit services provided by our independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Principal Accountant Fees and Services As required by our Audit Committee charter, our Audit Committee pre-approved the engagement of Rotenberg Meril Solomon Bertiger & Guttilla, P.C. for all audit and permissible non-audit services. The Audit Committee annually reviews the audit and permissible non-audit services performed by our principal accounting firm and reviews and approves the fees charged by our principal accounting firm. The Audit Committee has considered the role of Rotenberg Meril Solomon Bertiger & Guttilla, P.C. in providing tax and audit services and other permissible non-audit services to us and has concluded that the provision of such services, if any, was compatible with the maintenance of such firm's independence in the conduct of its auditing functions. During fiscal year 2014 and fiscal year 2013, the aggregate fees which we paid to or were billed by Rotenberg Meril Solomon Bertiger & Guttilla, P.C. for professional services were as follows: Year Ended December 31, Audit Fees (1) $ 280,000 $ 240,000 Audit Related Fees (2) 33,671 49,602 Tax Fees (3) 89,288 43,149 $ 402,959 $ 332,751 (1) Fees for services to perform an audit or review in accordance with generally accepted auditing standards and services that generally only our independent registered public accounting firm can reasonably provide, such as the audit of our consolidated financial statements, the review of the financial statements included in our quarterly reports and for services that are normally provided by independent registered public accounting firms in connection with statutory and regulatory engagements. 16